Cuts on household spending have reached a two-year high as consumer confidence continues to plummet following the Brexit vote, data suggested today.

More than half of Britons admitted to resorting to cost-cutting measures when it came to groceries and energy bills in the second quarter of 2017, according to Nielsen's latest Global Survey of Consumer Confidence and Spending Intentions.

The worries about the economy are so severe that almost half (45 per cent) of people in the UK think the country on the verge of a recession. The majority of these also believe the downturn will last for at least another year.

Cuts on household spending have reached a two-year high as consumer confidence continues to plummet following the Brexit vote

Commenting on the findings, Steve Smith, managing director at Nielsen UK and Ireland said: 'A variety of factors has contributed to people tightening their purse strings.

'The pound's weakness against both the dollar and the euro is finally feeding through to shop prices which means real inflation is running at over 2.5 per cent.

'In turn, this remains ahead of general wage growth and consequently, real household disposable income is being squeezed.'

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The collapse in sterling following Britain's decision to quit the EU resulted in inflation soaring to its highest level for nearly four years in May at 2.9 per cent, before easing back to 2.6 per cent in recent months.

Wage growth, meanwhile, has not kept up pace, meaning consumers have less to spend on daily essentials.

To compound matters, the index Nielsen said that consumer confidence has collapsed since the referendum.

To cope with the squeeze, nearly a third of people are switching to cheaper grocery brands to save money, and more than one in four are saving cash by cutting down on their gas and electricity bills

Immediately before the vote, the UK was the second most confident country in Europe, behind only Denmark, but now it has slipped to ninth place.

Despite the drop, the UK score of 99 points remains higher than the European average of 85.

The Philippines has the highest score globally, with 130 points, while Greece comes in at the bottom of the pile with a total of 52.

The biggest contributors to rising inflation over the last year were housing costs, utility bills and transport, followed by consumer goods like food, drink and clothing.

To cope with the squeeze, nearly a third of people are switching to cheaper grocery brands to save money, and more than one in four are saving cash by cutting down on their gas and electricity bills.

The figures mark a sharp contrast to when household money-saving activity hit its lowest level on record a year ago, when only 40 per cent were saving the pennies.

Concluding on the matter, Smith said: 'Shopping behaviours are changing in a way that is reminiscent of the aftermath of the financial crisis in 2008/9.

'Shoppers are well trained to use their household grocery budgets as a way to manage overall household costs, particularly as the desire to treat themselves remains.

'This is shown by the fact relatively fewer people are willing to sacrifice entertainment, holidays, and takeaway meals.'

Retail sales see small rise - but that's mostly thanks to food stores

Retail sales saw a small rise in July, mostly thanks to food stores, since most of the other categories actually recorded a drop, suggesting that consumers are cautious about spending on stuff other than essentials.

The Office for National Statistics said July sales rose by 0.3 per cent in terms of quantity, in line with the month before and ahead of economists' predictions of 0.2 per cent. June figures was revised down to 0.3 per cent from 0.6 per cent.

Food sales were up 1.5 per cent on the previous month, clothing sales rose 0.4 per cent and household goods were up 3.3 per cent, but elsewhere sales fell.